For hybrids to become a mainstream powertrain choice, (1) gasoline prices must rise and stay at or near historic highs, (2) generous state and/or federal subsidies must continue, and (3) CO2 regulations must be enacted that force automakers and buyers to take the hybrid route. "Hybrid sales are driven mostly by economic, not environmental reasons," says William C. Jackson, senior vice president, Automotive, Transportation and Industrials, Booz & Co. Unfortunately for automakers traveling down the hybrid path, the recent reduction in government incentives for hybrid owners coincides with gas prices that have fallen below the threshold that makes them economically viable. However, a focus on CO2 emissions by the new administration could expand hybrid offerings. "The climate issue will drive penetration as hybrids effectively will be mandated," Jackson says. However, some OEMs believe hybrid penetration will grow even without this help.

According to Ford's David Finnegan, manager, Hybrid Marketing, "The Prius set the pace, but the base is broadening as availability increases across OEMs and technology improves." Breadth does not necessarily mean depth, however, as the technology options available to meet tighter fuel economy standards will keep hybrids a marginal play for most OEMs. In addition, Finnegan says consumer interest in hybrids is strongest for C- and C/D-class cars and small SUVs. Though he admits most buyers purchase a hybrid with the expectation of getting a payback via better fuel economy for the higher initial cost, an increasing number of customers look at a hybrid as a hedge against future gas price increases and as a way to reduce their environmental footprint. "The environmental factor helps balance the cost for a lot of people," he says. For the rest, hybrids will have to come down in price.

For a number of reasons, including cost, the Belt Alternator Starter (BAS) mild-hybrid system soon may be as common as lint. Says Ted Bohn, electrical engineer at the Argonne National Laboratory's Center for Transportation Research: "Within the next 5-10 years every car will have it, because you get a lot of benefit for very little added cost and complexity." Currently, most BAS systems are limited to engines at or below three liters and six cylinders. However, powertrains of this size are expected to see the greatest growth in the coming years, making their adoption easier. This also will give OEMs the capability to inexpensively improve fleet fuel economy without having to resort to full hybrids and plug-ins. Says Bohn: "Several studies show that a conventional hybrid displaces more petroleum than going all-electric, and a plug-in hybrid uses no less energy and creates no less carbon than a conventional hybrid." Barring a government mandate or another quick run-up in the price of gasoline, the market for hybrid technology may prove to be narrower and less technically complex than expected.